U.K. stocks edged lower Friday, with bank shares keying off losses on Wall Street where worries about progress for tax cuts and other reforms ramped up, but the blue-chips market remained on course for a weekly advance.
What markets are doing: The FTSE 100 index UKX, -0.09% shed 0.1% to 7,439.51, led by the financial and health care groups. But the basic materials sector topped advancers. On Thursday, the benchmark fell 0.7%, the largest percentage drop since Nov. 30, according to FactSet data.
But for the week, the FTSE was on course to rise 0.7%. That would come after last week’s 1.3% advance. The index has risen 4.2% year-to-date.
The pound GBPUSD, +0.0000% traded at $1.3436, not far off from $1.3430 late Thursday. Against the euro, the pound GBPEUR, -0.0789% traded hands at €1.1395 compared with $1.1403.
The 10-year gilt yield TMBMKGB-10Y, -1.34% fell 3 basis points to 1.14%, according to Tradeweb. Yields fall when prices rise.
What’s moving markets: Worries surrounding Republican-led efforts in Washington to cut taxes cropped up again, sending U.S.-listed bank shares lower Thursday, and London-listed shares followed suit Friday. Florida Sen. Marco Rubio told Senate leaders he’ll vote against the tax bill unless it includes a larger expansion of the child tax credit. Meanwhile, Several Republican senators have expressed doubts about the tax overhaul ahead of an expected vote on the final bill next week, according to The Wall Street Journal.
Expectations for tax cuts and an overhaul in U.S. tax polices have at times boosted bank stocks worldwide over the last year.
“Investors have been watching the twists and turns of this bill with great focus, because of its expected impact on big firms,” said Jasper Lawler, senior market analyst at London Capital Group.
“Any signs of the Republicans squeezing the deal through, could see the markets quickly recoup yesterday’s losses.”
Meanwhile, EU leaders on Friday continued to meet for a summit where Brexit features high on the agenda. The group is expected to give the green light for divorce talks to move onto the second phase.
U.K. Prime Minister Theresa May this week suffered a legislative defeat as the U.K.’s lower house voted to amend the Brexit bill to give members of parliament the power to reject the final divorce deal struck with Brussels. The government had warned that the measure could jeopardize a smooth exit from the EU in March 2019. May on Thursday reportedly said she was “disappointed” by the vote, but that Britain remains on course to exit from the European Union in 2019.
Stock movers: Bank shares were in the red. HSBC Holdings PLC HSBA, -0.70% HSBC, -1.03% fell 0.9% and Standard Chartered PLC STAN, -0.62% dropped 1.1%.
Barclays PLC BARC, -1.11% BCS, +0.46% fell 1% and Royal Bank of Scotland Group PLC RBS, -0.54% RBS, -0.39% was 0.6% lower. Lloyds Banking Group PLC LLOY, -0.03% LYG, -1.09% was off 0.1%.
Persimmon PLC shares PSN, -1.06% fell 1.2% after the home builder said Chairman Nicholas Wrigley will resign from the board. He will remain in his position while the company looks for his successor.
BT Group PLC BT.A, +0.84% was up 0.4% and Sky PLC SKY, +0.66% gained 0.5%, with BT Group saying it’s reached an agreement with Sky to provide packages of their TV channels on each other’s platforms.
Other advancers include property investment Segro PLC SGRO, +1.50% , up by 1.5%, and energy suppliers SSE PLC SSE, +1.07% and United Utilities Group PLC UU., +1.13% higher by 1.1% and 0.8%, respectively.